In the shadow of megamergers between agency giants and mammoth investments in data and AI, the role of independent agencies can be easily overlooked. But new research from benchmarking data company Agency by Agency reveals that 99 percent of UK agencies are independent – and the Alliance of Independent Agencies, a UK trade body representing over 1,700 indies, has found that their combined UK turnover (£26.7 billion) is more than three times that of the holding companies (£8.2 billion).
But the independents also find themselves in the position of competing for some of the same business as the major agency groups. Clive Mishon, Founder and Co-Chair of the Alliance of Independent Agencies, says the holding companies are increasingly playing for briefs that would recently have been indie domain.
“Large agencies like Publicis are trying to go for briefs that independents were used to going for, and probably five years ago, a large group wouldn’t touch, but now they’re very interested,” he comments. “So large groups are trying to eat the lunch of independents to some degree, much more than they were a few years ago.”
On the flipside, independent agencies are gaining more abilities to compete for global business. Last year, UK agency Total Media was acquired by its European partner Mediaplus, rebranding as Mediaplus UK last month. Mediaplus UK CEO Celine Saturnino says the merger has given the agency scale in new markets for global business, and the company is pitching more as a result, including against the holding groups.
“It’s helpful when you’re pitching for international accounts,” she says. “If you don’t have international markets, then how can you possibly be giving international insights of what works in the UK, does it work in the US, does it work in Germany? So I think just being able to have that quality of local insight is what makes the difference.”
Beyond the black box
But across the landscape, agencies are under pressure from lower client spending, while new business is becoming harder to secure, as macroeconomic factors impose delays on decision-making processes. In the Alliance’s Performance Pulse survey, new business generation was cited as the biggest challenge facing independent agencies, followed by client delays and budget constraints.
And while these challenges also persist for network agencies, the holdcos have more facilities in place that enable them to lower their pricing in order to win new business, most notably the use of principal or inventory media.
“I think holdcos are more often willing to take business on that’s loss leading, and make it work somehow, with the inventory trading model used to fund the ability to offer those pricings,” comments Celine Saturnino. “So I think they’re more willing to do more from a commercial perspective, because they’ve got other ways of funding that gap, through arbitrage or product etc. And there are certain clients that are happy to have really low fees, and know that there must be another way an agency is making money.”
And although indies may not be able to deliver cost-savings at that scale, Saturnino argues that the trade-off in transparency makes indies better suited to clients who want to see “under the hood” of how their agency partners are doing business.
“What I’m finding in the conversations I’m having, both at pitch level and with clients, is transparency needs to run from commercial trading to how you deliver data analytics and reporting product development, and ensuring that those things are not a black box,” she says. “That kind of transparency through your entire business is something independents are able to deliver more effectively.”
Joseph Cinko, Head of AV at UK agency Bountiful Cow agrees that the structure of independent agencies “naturally fosters transparency”, as they are less likely to have deals in place with platforms and media owners independent of the clients’ needs.
“Decisions are driven by what benefits the client, rather than by pre-existing deals or preferred partnerships that benefit the agency,” he comments. “Clients should see the best partners for their plans, not the ones that serve the agency’s bottom line.”
Lost in the network
Research from the Alliance, carried out by Opinium, found that marketers view indies as particularly ethical, trusted and flexbile. And though network agencies also scored highly on those qualities, Clive Mishon points out that indies offer specialist services for brands looking to deliver across specific areas, such as experiential, social media or influencer agencies.
And while the biggest brands will look to the Big Six for their generalist offerings, and will benefit from receiving the highest level of that agency’s attention, Saturnino argues that mid-sized clients are liable to get lost in the network of the largest holding companies.
“There’s still a size of global client where a global network makes sense, because what they’re focused on is scale, bottom line pricing, and their investments are demanding of that,” she says. “Then there’s a scale of global client that gets lost in a network and doesn’t receive the benefits of the largest clients. And that’s the real opportunity for groups like ours, where we can provide scale, but coupled with independence in terms of quality of service and transparency.”
This also leaves the door open to brands seeking a new home after the impending holdco merger between Omnicom and IPG, creating an even bigger combined network, as well as the employees who have lost or will lose their jobs. Omnicom has already cut 3,000 roles ahead of the acquisition, and more layoffs are expected following completion of the merger. Mishon adds that the holding companies have shed more roles than independents over the last five years, making job security higher at indie agencies.
“Most people I speak to want to get out of the holdcos,” comments Saturnino. “Most of them are overworked and stuck in a box where there’s only so far your role can go, because it’s such a complex organisational structure that you’re so much more limited to the role that you’ve been brought in to do. The mood music I get from people I’m speaking to is that they see the indie side as more attractive in general.”
“Many professionals are drawn to indie agencies for their agility and flexibility,” adds Joseph Cinko. “The opportunity to learn beyond a defined job role and shape one’s own career path is often more pronounced in an indie setting compared to the structured, hierarchical nature of a holdco.”
Intelligent investment
Overall then, the picture for independents is broadly positive. Almost 60 percent of UK indies saw revenue growth in the last six months of 2024, according to the Performance Pulse survey, despite the headwinds facing the advertising industry.
But economic uncertainty has also pushed brands towards “a stronger focus on efficiency”, according to Cinko, as clients seek the same results on reduced budgets. The holdcos have leant heavily on AI investments to help drive efficiencies, but Cinko says it “would be naïve” to think indies haven’t also recognised the potential of AI.
“For indie agencies, AI’s greatest short-term value lies in its ability to level the playing field, allowing them to differentiate themselves through strategic thinking rather than sheer scale,” he comments. “Ultimately, the real competition isn’t about the tools themselves, but about the people using them.”
Saturnino agrees that AI investments must be strategic, as media agencies are unable to compete with tech firms endemic in the space, while independents have to allocate their resources in order to best serve their clients’ needs.
“We have to invest but at the same time, I know full well that anyone investing millions of pounds into trying to create something is wasting their time, because Microsoft and others will do it quicker and better and will then just license it to the rest of the world,” she argues. “I think the smart agencies will know where to invest, and those over-investing will probably fall short in the end.”
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